THE REGIONAL DIVIDEGreater London GVA- 171% of UK
West Wales and Valleys- 72.6% of UK
41000 jobs to be created in the Square Mile by 2023
40000 jobs needed in Valleys to reach average employment rate
Most geographically unequal nation in the EU
THE WIDENING GAP
• Inner London West GVA/head £136k
• Forecast growth of 36% by 2023• Gwent Valleys GVA/head
£13.29k• 3.5% annual growth rate
needed just to maintain the gap
OUTPUT PER HEAD
• UK £23394• England £24091• Scotland £21982• Northern Ireland £17948• Wales £16893• West Wales & Valleys £14763
LABOUR PRODUCTIVITY
Nominal GVA/hour worked – UK =100
England 101.5
Scotland 97.4
Wales 85.2
Northern Ireland 82.8
Complex reasons – low business investment, infrastructure, low rates of innovation and relatively low skills etc.
WHOSE ECONOMIC RECOVERY ?
UK Increase in Employment 2009-2013 6.7%
Caerphilly Increase in Employment 2009-2013 2.0%
Impact of Welfare Reform on Caerphilly £73m pa
UK Average Loss per Working Age Adult £470 pa
Caerphilly Average Loss per Working Age Adult £640 pa
RE-BALNCING THE ECONOMY
Growth will not close the gap – need redistribution of economic activity
Developing regional dimension to economic policy
Maximizing the impact of City Regions/City Deal
Devolving powers to local authorities
Reviving industrial investment and production
Targeting places and creating resilient economies
A PROACTIVE REGIONAL POLICY
Move Away from unsustainable South East - centric mentality
Target Investment on under-utilized assets in the regions such as land, labour, property and infrastructure
Include Regional Benefits Test in Government decision making
Build on the manufacturing base in the regions
Improve inter and intra regional connectivity
CARDIFF CAPITAL REGION
Need for labour market realism
Develop poly-centric approach
Role of infrastructure – Valleys Metro & M4 Relief Road
City Deal – opportunity to re-balance infrastructure spending?
Need to address governance & accountability issues
Needs versus opportunities
DEVOLVING POWER TO LOCAL AUTHORITIES
Combined Working
Fiscal devolution – flexibility over spending and borrowing
Building economic resilience through investment in skills, infrastructure and business support
Remove uncertainty
Promote strong leadership
REVIVNG THE MANUFACTURING SECTOR
Caerphilly – 22.5% jobs are in Manufacturing – almost 3x GB average
Maximize potential of Tier 1 Assisted Area Status with the balance in favour of grants rather than loans
Target business support finance on projects that improve productivity
Support successful companies as well as target sectors
Address skills mismatch and under-employment
Develop Anchor Companies
CREATING BETTER JOBS
UK has a higher proportion of lower skilled jobs than any other OECD country, except Spain
Low skilled jobs contributing to productivity gap & increasing in-work poverty
21 % of workers over-qualified for their jobs, up from 13% in 2011
40% of Welsh companies failing to invest in workforce
Need to build on WAG’s Employer Pledge
Enhanced role for anchor companies WAG’s apprenticeship programme & UK Futures programme
ROLE OF ANCHOR COMPANIES
Global companies have a significant presence in Wales
38 Anchor companies identified by WAG
Less than 1% of all companies but provide 40% of private sector employment
Tend to invest more in R&D and training
Generate more GVA that can be shared through the supply chain
Potential across all sectors to support diverse economy
Targeting Places and Creating Economic Resilience
Geography and decision making
Using procurement as a development tool – supply chains and SMEs
EU Funds – need for balance between large projects and local needs
Target Jobs Growth Wales on weaker labour markets
Re-focus Work Programme on skills , health, intermediate labour markets and local delivery
Some Final Thoughts
Move beyond simple employment numbers Commuting can widen job choice – but needs to be
accompanied by raising skills and earning potential Understand that where money is spent rather than
where it is earned is just as important to local economies
Avoid over-dependence on particular sectors Be better informed on local labour markets and the local
business environment Plan for all eventualities in a fast moving world No quick solutions – 1923 Special Development Areas!